When is 100 per cent not 100 per cent?
10 June 2005The G8 Finance Ministers are discussing a debt deal which is regularly described as 100 per cent debt cancellation. But is it? When it is not 100 per cent of the countries that need debt cancellation.
Current proposals have ranged from only 5 up to 18 countries (14 in Africa) that would qualify immediately; there could be more, perhaps 34 countries (29 in Africa) if they meet the necessary conditions. But JDC analysis shows that at least 62 countries need 100% debt cancellation now in order to meet the Millennium Development Goals.
Check the facts no. 1: how many countries are included? When it does not include all debts.
If only World Bank and African Development Bank debt is included, this would cancel less than half of the debt payments being made to multilateral institutions by qualifying countries in 2005. If IMF debt is included, it still will not cover the huge debts to other multilateral institutions, such as the Inter-American Development Bank. There are countries still desperately in need of bilateral debt cancellation: Nigeria, for example, has paid $18 billion in debt service on debts of $17 billion, and still has a debt stock of $34 billion.
Check the facts no. 2: which debts are included? When it does not give enough new money for poverty reduction.
Recent proposals mean that qualifying countries would benefit from debt cancellation by $404 million this year, or $742 million if IMF debt is included. But JDC analysis indicates that the 62 countries needing total debt cancellation will pay over $10 billion in debt service to multilateral institutions this year.
Check the facts no. 3: how much will poor countries still be paying on debt? Some proposals have suggested paying for debt cancellation from existing aid budgets or from the resources of development institutions.
Check the facts no. 4: how much money will be released to combat poverty? When it still comes with harmful conditions attached.
Countries have to qualify for debt relief under the Heavily Indebted Poor Countries initiative – which means they have to implement economic policies such as enforced privatisation, trade liberalisation and public spending cuts, often undermining democracy and damaging economies.
Jubilee Debt Campaign spokespeople are available for interview, analysis and comment:
- Stephen Rand, co-chair: 07889 158215 (mobile)
- Caroline Pearce, campaigns officer: 020 7324 4722 (office); 07791 971890 (mobile)
- Trisha Rogers, national coordinator, 020 7324 4722 (office); 07712 005666 (mobile)